SBAM seeks a path forward for Michigan’s business climate

The Small Business Association of Michigan wants to find a route to further improve the state’s entrepreneurial climate.

The Lansing-based trade association that represents 25,000 members across the state expects to issue a “roadmap” this fall for nurturing a better entrepreneurial environment and spurring greater economic activity. The report will offer recommendations for public policies on issues such as taxes, state regulations, talent, the commercialization of innovations, and capital formation.

“I don’t know if there is one magic key to it, but there are a lot of things that we can keep doing and looking at to keep our state moving,” said Tony Stamas, vice president of government relations for SBAM.

A task force consisting of about 25 SBAM members has been working on the entrepreneurial roadmap for nearly a year. The upcoming report will seek to build on the entrepreneurial scorecard the organization has published annually for 12 years.

The most recent edition of the scorecard indicated that Michigan’s entrepreneurial environment continues to get better, although the gains the state made coming out of the Great Recession have slowed as other states changed their policies and caught up.

“Part of our thinking is, what will it take to get back out in front,” said SBAM CEO Rob Fowler. “Other states caught up to the leadership we had there for a moment in time.”

Since bottoming out, Michigan made “dramatic progress” in the last half-decade, but it needs to examine what it can do next to maintain momentum, said Stamas, a former state lawmaker from Midland whose tenure in Lansing coincided with the state’s harsh economic decline and the early part of the recovery.

Even with the progress of the last few years, Michigan continues to rank poorly compared to other states in startup activity. The state ranked 41st in a 2015 startup activity index published by the Kansas City-based Kauffman Foundation.

“A lot of the things we’ve done, other states have followed likewise. It never stays in one spot for long, so we have to keep moving forward and say, ‘OK, we accomplished these things, but what’s next,’” Stamas said.

SBAM’s entrepreneurial task force will delve into issues such as policies for better commercializing the innovations and technology emanating from research labs at universities in the state. Michigan companies compare quite favorably to other states in the development of intellectual property and the number of patents issued, but the state sits around the middle of the pack for commercialization.

“We’re a leading R&D state, but we’re not a leading commercialization state,” Fowler said. “What will it take to live up to our potential?”

State tax policies up for discussion include reinstating tax credits for angel investing and research and development — a benefit legislators eliminated in 2012. Life sciences trade group called for a return of both tax credits in its recently issued roadmap for growing the industry, and “that’s one of the things we have to look at,” Stamas said.

The task force will also look at state taxation on small business owners when they sell their companies. The goal is to retain small business owners in the state after an exit and encourage them to start another venture, get involved in an investment fund, or perhaps remain active as a mentor for young entrepreneurs.

“We sometimes hear from people who sell their businesses and end up leaving the state. We want to keep them here in the state because they are a value to the state and their community, and a lot of these folks are serial entrepreneurs,” Stamas said. “Even though they’re selling one business, they’re going to be reinvesting, so we want to make sure we are encouraging them.”

Some of the policy recommendations and ideas the roadmap may offer could take years to pursue and implement, Fowler said, noting they could offer fodder for the next gubernatorial campaign in 2018.

By this time next year, “we will know who the candidates are,” he said. Having a comprehensive agenda to promote entrepreneurship can “lay the foundation” for debate and action over the next several years, Fowler said.